“Despite the current difficulties in both the marine vessels market and the and commodity markets, Amedeo is well resourced and remains focused on long term strategy of building a vertically integrated business in the resource and energy and related infrastructure sectors,” it said in its interim statement.

READ: Amedeo Resources acquires stake in producing copper miner

The group has an indirect stake in Chinese shipyard YZJ Offshore, which is preparing to deliver its first rig, and a 49% stake in metals trader MGR.

In January, Amedeo acquired a 2.5% stake in copper miner Ganjin Kani for US$500,000 and it will work with MGR on supplying the metal to East Asia.

Losses in the half year to June were US$717,000 (US$632,000), while current assets fell to US$3.5mln (2016:US$4.6mln).

Cash at end June dropped to US$1mln from US$4mln primarily because of the acquisition of GKC and a £1.8mln loan to MGR in January.

As part of the deal, Amedea also has a 5-year option to buy a further 5% of GKC – based near the city of Mashhad – for US$2mln.

GKC has extracted around 1mln tonnes of ore from its three mines so far, averaging 0.9% copper.

The producing mine on its own is estimated to have at least 6.5mln tonnes of copper with a 0.9% average copper content, although this hasn’t been confirmed to international standards, Amedeo said.

GKC sells its copper concentrate into Asia, including the world’s largest copper consumer China.

MGR Resources, which trades and brokers iron ore and in which Amedeo has a 49% stake, will work with GKC to increase its supply of copper into the Asian markets.

Glen Lau, chief executive of Amedeo said: “We are pleased to have made this acquisition which will allow MGR to widen the commodities it trades and brokers and, at the same time, give MGR a captive supply of copper.”

The group also has a 49% stake in ferrous metals and ore wholesaler MGR.

With the iron ore market down, MGR cut back activities to a bare minimum and with surplus capital repaid its £1.2mln loan from Amedeo.

Overall, for the six months to June 30, Amedeo posted a loss of US$632,000 against US$749,000 in 2015.

Cash at the end of the period was US$3.998mln (2015: US$3.281mln), mainly due to that repayment of the loan by MGR.

"Despite the current difficulties in both the marine vessels market and the iron ore and commodity markets, Amedeo is well resourced and remains focused on long term strategy of building a vertically integrated business in the resource and energy and related infrastructure sectors," it said.

The physical build of the Explorer rig is currently going through the commissioning process.

With the delivery now on the horizon the group noted that winning further new orders had been difficult in the current market, but also highlighted that it does not expect the situation to continue in the medium term.

It added: “When the recovery does come, YZJ Offshore, having proved itself with Explorer 1 and with its capability to produce advanced, specialised and localised rigs as well as a range of other vessels, is well placed to take advantage of it.”

The group this morning released its financial results for the twelve months to December 31.

It reported a US$3.58mln loss for the year.

All group revenue, some US$128,000, came from the non-core MGR Resources iron ore marketing business. The MGR unit made a US$90,000 profit for the year, which saw depressed iron prices and challenging markets.

Group administration costs were reduced by 20% to US$651,000 for the year.

Amedeo said it ended the year with US$2.34mln of cash, and now has a balance of US$4.15mln.

Stockbroker WH IRELAND highlighted Amedeo’s good cost control against a challenging backdrop, and repeated a ‘speculative buy’ recommendation and suggested a ‘fair value’ of 45p per share.

“Amedeo remains well positioned to benefit when the cycle turns, particularly given its low cost capabilities,” the broker said in a note.

Amedeo Resources (LON:AMED) told investors that the first order for a mobile jack-up drilling rig remains on schedule to be completed by the end of this year.

The investment company, with a stake in a Chinese rig building venture, this morning revealed first half losses narrowed considerably to US$15,000 from US$271,000. It comes as cash administration costs reduced to US$248,000 from US$453,000.

Amedeo ended the period, to June 30, with cash of US$3.28mln.

Amid weak international oil prices, the company says the rig market remains difficult. Talks with several potential purchasers of new rigs continue, though no new orders have yet been obtained.

The company describes the situation as disappointing, though it highlighted that the facilities have the capability to build many different types of vessels and, at the same, time it does not expect weakness in the rig market to continue in the medium term.

Amedeo says it remains focussed on a long term strategy of building a vertically integrated business in the resource and energy related infrastructure sectors.

“With the current difficulties with the rig market, winning new orders at YZJ Offshore has been difficult,” the company said.

“We do not expect this situation to continue in the medium term, and when the recovery does come, YZJ Offshore, having proved itself with Explorer 1 and with its capability to produce advanced, specialised and localised rigs as well as a range of other vessels, is well placed to take advantage of it.”

Amedeo also reported that its part-owned iron ore trading business has been responding to the reduced demand by continuing to monitor the market and also explore opportunities among other commodities, including ‘soft’ commodities long the East and South East Asia, South Asia, Middle East and Africa corridors. It added that ‘actual broking activities’ during the period were minimal.

John Cummins, analyst at broker WH Ireland, says Amedeo’s results demonstrate a tight control of costs against the challenging market backdrop.

“Whilst end markets are likely to remain challenging for some time, we believe that Amedeo remains well positioned to benefit when the cycle turns,” he said in a note.

Turmoil in crude markets has naturally overshadowed what has otherwise been a key period for Amedeo, which has made significant progress in the past year.

In Tuesday’s results statement the group acknowledged the slowdown in market for new rigs, though it revealed that its Chinese ship building partner has sufficient work for their yard on the banks of the Yantze.

The company at the same time expects demand for rigs to pick up in the medium term.

Chief executive Glen Lau says although Amedeo’s progress has slowed, he expects a recovery and that it will benefit from the upturn.

Operationally, important progress continues towards the completion of Explorer 1, a mobile jack-up rig, which is due during the second half of this year. The vessel was launched into the water this April ahead of its full completion.

“The build of Explorer 1 is to quality and schedule, building the New Yard's reputation and laying firm foundations for the New Yard's future,” Lau added.

John Cummins, analyst at WH Ireland, said the Explorer 1 completion is very much the focus for investors in the short-term.

The analyst, who has set a ‘speculative buy’ recommendation for Amedeo, believes there could be much more to come from the young oil engineering services group even though the market is currently tough.

“Whilst the market backdrop has become more difficult following the decline in the oil price, and this is still a relatively early stage in the group’s development, the medium-term growth potential for Amedeo’s key investment in YZJ Offshore is significant,” Cummings said in a note.

At 0.75p per share WH Ireland’s twelve-month price target suggests some 180% upside to the current price of 0.32p.

That said, Cummings notes that it is a challenge to set a ‘fair value’ for the early stage company and there could be scope to raise the bar further in due course.

“The potential for the group is significant given the backing provided by operating partners, majority shareholder and track record of management.

“However, set against these positives, this remains an early stage investment in a Group and a key investment with a limited track record in an extremely challenging market.”

Amedeo is both well backed, with Qatar’s state investment authority owning 61% of the shares, and at the same time it is partnered with Yangzijiang Shipbuilding (YZJ), a shipbuilder worth US$4bn.

With Yangzijiang Shipbuilding, Amedeo has a 19% stake in YZJ Offshore, which owns the yard in China.

Cummings, in his note, highlights that YZJ is a powerful senior partner. “Even against the current malaise in the oil services sector, we believe that YZJ Offshore has the potential to succeed in its ambition to become a major offshore yard in Asia,” he added.

Moreover, YZJ is able to support the operation in the current market lull and, according to this week’s results, it has stepped in to provide the yard with ‘overspill’ work, for container ships.

The yard is able to build a range vessels, Lau highlighted, and investors will be hoping that Explorer 1 is the first of many.

]]>Thu, 04 Jun 2015 14:41:00 +0100http://www.proactiveinvestors.co.uk/companies/news/107745/amedeo-resources-set-for-key-milestone-as-first-rig-nears-completion-107745.htmlhttp://www.proactiveinvestors.co.uk/companies/news/107625/amedeo-resources-eyes-recovery-in-rig-market-107625.html
Amedeo Resources (LON:AMED) has told investors it expects the market for oil rigs to pick up in the medium term.

The AIM firm, which today released results for 2014, highlighted that during the period the New Yard operation on the banks of the Yantze was operational.

New Yard, a joint venture with Singapore-listed Yangzijiang Shipbuilding (YZJ), has been building the Explorer 1 rig and the vessel was launched into the water this April ahead of its full completion which is due in the second half of this year.

As well as Explorer 1, New Yard has also dealt with overspill workload from YZJ’s principal shipbuilding operation, building blocks for container ships.

Chief executive Glen Lau said that market conditions have slowed Amedeo’s progress, but, he expects a recovery in the medium term and at that point he believes the company will be well placed to benefit.

"YZJ Offshore's New Yard is fully operational,” Lau said. “The build of Explorer 1 is to quality and schedule, building the New Yard's reputation and laying firm foundations for the New Yard's future.

“Although the rig market has slowed, we expect it to pick up in the medium term.

“In any case, the New Yard is able to build a range vessels and blocks and is well placed to take advantage of any upturn.”

Amedeo today reported that pre-tax losses on ordinary activities narrowed by 53% to US$128,000 in the eleven months to December 31; this does exclude non-cash items and one-off items. The loss for the year was reported as US$1.4mln.

The company ended the period with US$2.9mln of cash and equivalents.

Revenues associated with the MGR unit, which the company provides with business and market services, totalled US$91,000.

Interim results for Amedeo Resources (LON:AMED) charted a period of significant progress.

During the six months to June it successfully raised just over US$8.5mln, which puts the group on sound financial footing.

Its main investment is in a joint venture with Singapore-listed Yangzijiang Shipbuilding (YZJ), which landed its first order rig order in 2012.

The keel was laid for the 350ft Le Tourneau Super Enhanced 116e jack-up in April and it is on schedule for delivery in the second half of next year.

In the update, Amedeo said YZJ’s new yard on the banks of the Yangtze in Shanghai has been completed.

"The new yard is now operational and steady progress on Explorer 1 continues,” chief executive Glen Lau said.

“Importantly the client is impressed with the build quality. Third parties are also visiting, inspecting and are satisfied with the new yard and build quality, which compares favourably with other Chinese yards.

“Building reputation is key in developing a successful yard, and YZJ Offshore is making headway in establishing its reputation.”

The group also owns a 49% stake in the commodities house MGR, which despite the headwinds caused by the iron ore market remained profitable during the period.

“Importantly, it is moving from short-term contracts to longer-term, lower risk contracts. We look forward to continuing to build Amedeo," said Lau.

In common with most companies at this formative stage of development Amedeo was loss making – to the tune of US$815,000 in the half-year to June 30.

The underlying deficit dropped to £417,000 (£771,000) in the year to January, though including non-cash items there was a loss of £969,000 (£1.1mln).

Since the year end, Amedeo’s Chinese associate YZJ's Offshore's new yard, has become operational while progress on its first rig order, Explorer 1, is to schedule.

Metals trading arm MGR also paid Amedeo £311,000 during the year.

Shares in the AIM-listedfrim spiked sharply in February when it confirmed reports it had been chosen for a US$1.7bn contract for semi-submersible platforms, though today Amedeo said some conditions remained outstanding and until these are sorted out the contract will not be effective.

Amedeo Resources (LON:AMED), an investment company focussed on resources and resources infrastructure, said it raised about £5.2mln through a subscription and placing.

About £3mln was raised through a subscription for 300.5mln shares by Mena Global Investments 1, a Malaysia-based fund. Mena holds about 9.2% of Amedeo’s shares following the subscription and placing.

Proceeds of the subscription will help fund an obligation of YZJ Offshore Engineering (YZJOE), in which Amedeo has a 46.5% stake, to pay up its stake in Jiangsu Yangzijiang Offshore Engineering, a new offshore rig building yard.

Last month, Amedeo said YZJOE was awarded a conditional US$1.7bn deal to build two semi-submersible drilling platforms.

Proceeds from the placing will provide working capital for MGR Resources, a trader of ferrous metals and ore. Amedeo has a 49% stake in MGR Resources.

The subscription and placing were priced at 1p each.

Shares in Amedeo moved towards that level, trading at 1.02p on Monday.

The AIM-quoted firm, worth about £60mln after the share price rise, has an indirect 18.6% stake in Chinese firm Jiangsu Yangzijiang Offshore Engineering (YZJOE), which has a conditional deal to build two semi-submersible drilling platforms.

There is a possibility that the deal will be extended for another two rigs.

Amedeo said the contract value was US$1.7bn, and delivery of the drilling platforms would take around three years.

The firm invested US$15.3 mln into the new venture - YZJOE Singapore - which is a collaboration with major Chinese shipbuilding group, Yangzijiang Shipbuilding (YZJ) - a group with a market cap of US$3.5 billion.

Amedeo has a 46.45% stake in the venture.

YZJOE Singapore has in turn a 40% share of YZJOE China - a new Chinese offshore rig building yard - in which Amedeo has an indirect stake of 18.6%.

Within months of the joint venture being struck the yard secured a US$170 million order to construct and deliver one Le Tourneau offshore jack-up oil rig.

YZJOE is also in the process of building its own purpose-built rig-building yard - the Taicang yard, due to be completed in the middle of this year. Once up and running, it will have capacity to produce up to 10 rigs at the same time as other offshore vessels.

The order is currently on track for delivery in mid-2015 with the main hull nearing completion, Daniel Stewart analyst Simon Willis said.

The analyst noted that following the Macondo well blowout in the Gulf of Mexico in 2010, the offshore rig building sector has seen strong demand.

"With almost 50% of the world’s total current fleet of jack-up rigs more than 25 years old, there has been a surge in new orders," notes Wills.

"Amedeo believes demand for newly designed higher specification rigs to enable deeper and more efficient drilling will be underpinned by the phasing out of the existing stock of rigs over the next few years.

"The group holds the view that, based on the current stock and new rig builds in the pipeline, there could be an under supply by almost 200 jack-up rigs by 2020."

Wills notes this implies a replacement rate of around 10% per year through to 2020, while overall, growth in the offshore sectors is expected to be 15-35% per year. over the next 10-15 years.

The broker has initiated on the stock with a 'buy' recommendation and 2p price target - a 263% increase on the current share price of 0.55p.

]]>Thu, 30 Jan 2014 12:22:00 +0000http://www.proactiveinvestors.co.uk/companies/news/55259/amedeo-resources-joint-venture-with-top-chinese-shipbuilder-could-be-transformational-says-daniel-stewart-65357.htmlhttp://www.proactiveinvestors.co.uk/companies/news/55061/amedeo-resources-reports-good-progress-across-business-65127.html
Offshore resources investor Amedeo Resources (LON:AMED) impressed the market as it revealed that all areas of the business are making good progress.

Amedeo’s largest stake is a 46.5% holding in YZJ Offshore Engineering, which in turn has a 40% share of Jiangsu Yangzijiang Offshore Engineering, a new Chinese offshore rig building yard, giving Amedeo an indirect stake of 18.6%.

The company reported that the yard development is ahead of schedule, with the wharf and finger pier nearly finished.

The skidway and the 900-tonne gantry crane are expected to be completed in the first half of 2014, it added. Civil works meanwhile are halfway to completion and are expected to be operational in the coming months.

It already has its first order to the tune of US$175mln to build a jack-up rig, which it says is progressing well and on track to be delivered midway through 2015.

Talks over more rigs are ongoing as potential customers are impressed with the company’s work.

Its other investment, a 49% stake in MGR Resources, a wholesale trader of ferrous metals and ore, continues to go “from strength to strength”.

It is now broking around 100,000 tonnes of iron ore every month, with advanced discussions underway over more long-term deals which should lead boost this amount.

MGR, which is already paying dividends since Amedeo’s investment, is continuing to explore opportunities in the related sectors of chromium and nickel.

From a financial standpoint, Amedeo, which underwent a restructuring last year, said cash administration costs have been significantly reduced compared with the previous year, reducing the gap between outgoing and incoming cash.

The shares rose 9.5% to 0.59p each.

]]>Thu, 23 Jan 2014 09:43:00 +0000http://www.proactiveinvestors.co.uk/companies/news/55061/amedeo-resources-reports-good-progress-across-business-65127.htmlhttp://www.proactiveinvestors.co.uk/companies/news/55058/amedeo-resources-has-plans-to-rival-the-worlds-biggest-rig-builders-65120.html
To say Amedeo Resources (LON:AMED) has hit the ground running would be an understatement.

In less than 18 months financier Glen Lau, who is chief executive, and executive director Zafar Karim, a former investment banker with company building and turnaround credentials, have transformed what was essentially a cash shell into one of the most exciting investments in AIM.

Amedeo has been instrumental in building from scratch a business that will go toe-to-toe with some of the big beasts in the offshore industry.

At the same time it is attaining financial self-sufficiency thanks to a US$49,900 investment in a commodity trader that is now paying dividends (quite literally).

Lau’s book of contacts has been vital to creating a rig joint-venture (JV) that gives the group a seat at the table with Yangzijiang, China’s largest privately controlled shipbuilder, and an 18.6% indirect stake in the JV firm, YZJOE Offshore.

YZJOE already has its first order, for a US$175mln, to build a jack-up rig similar in size and style to Lamprell’s LeTorneau 116E, though higher in specification.

It is currently under construction for delivery in the middle of next year.

At the same time it is developing a purpose built yard on the banks of the Yangtze near Shanghai.

That this happened so quickly is down to the involvement of Yangzijiang, which helped with the negotiations for the site and is also able to source the finance on good terms for prospective buyers.

The relationship works because it allows Yangzijiang to diversify into higher margin rig construction while sharing the risk with a partner outside the People’s Republic.

Importantly, Amedeo brings something to the party itself. Lau, the ex-deputy chairman of PPL Shipyards, a Singaporean rig builder, knows a thing or two about the offshore industry.

Not just that, he has incredible contacts both in Asia and in the Middle East, which makes the quest for customers and capital that much easier.

And the JV is riding into a perfect storm, according to Lau, who points out that there are over 350 rigs that are over 20 years old.

Meanwhile, as the quest for new sources of hydrocarbons take us into deeper, more inaccessible waters, so there will be a need for more highly sophisticated rigs.

Not just that, accommodation facilities, and semi-submersible vessels are also in huge demand.

Reports by McKinsey and Booz Allen confirm there is significant pent-up demand.

“We have seen massive rig buying going on the last two years and we feel it will go on for another five years,” Lau told Proactive Investors.

“And it is not only about jack-up rigs. It is about semis (submersibles), accommodation vessels and platforms and FPSOs (floating storage vessels).

“Whole fleets need to be upgraded, but there are not many players. I know this through my association with PPL and our Chinese partners.”

This probably explains why the Amedeo CEO is confident YZJOE’s order book can quickly fill to US$1bn.

But first the partners need to complete the initial contract to prove they are up to the job. This isn’t something they are going to rush.

“I am very confident we can do this (achieve a significant order book), but we have to get the first one right. We have to earn our spurs,” said Lau.

Amedeo invested around US$15mln to take its stake – which will look like an insignificant sum if the business does achieve its full potential.

There is only one downside and that is the two to two-and-a-half years it takes to collect the revenues from projects.

A more immediate source of income is provided by the other leg of the Amedeo business – MGR Resources, a commodity trading house focused on ferrous metals and those other ores used in the production of steel.

The AIM listed group acquired a 49% stake for just US$49,900 and advanced the business a US$1.95mln, three-year convertible loan carrying a coupon of 15%.

Again Lau has been able to bring out his little black book to source sellers and buyers of ore that have given MGR significant traction.

And this is a hallmark of Amedeo under Lau and Karim. “The company doesn’t come in as a passive investor,” Karim explained. “We bring something to the party, we add value.”

The impetus given by Amedeo, both financially and managerially, has led to a significant turnaround at MGR, which has paid a dividend of US$210,000, with another in the offing before the financial year-end.

The cash injection means Amedeo is becoming financially self-sufficient; so it won’t be back to the market, cap in hand for cash to meet its working capital requirements.

If there are opportunities to grow the business significantly, then it might tap investors, Karim said.

The company is well backed with 72% owned by QIC, an umbrella group for a number of ultra-high-net-worths from Qatar.

Repeating its ‘speculative buy’ recommendation, City broker Beaufort concluded: “With a supportive large shareholder we can expect more deals in the resource infrastructure and asset arena and in new geographic locations.

“[Amedeo] has exciting prospects, and we encourage investors to join in what looks like the early stage of a potentially large enterprise.”